SES Water has submitted its AMP 8 Business Plan to regulator Ofwat setting out its proposal to invest £413 million between 2025 to 2030 - the first five years of a broader 25-year strategy. 

 The water only company said the future investment will continue to allow SES Water to monitor and manage its network of water treatment works, pumping stations and underground pipe network more closely than ever before.

The plan includes further investment in smart technology - as the first UK water company with a fully smart network, SES is planning to will boost this technology to incorporate more sensors and provide smart meters to customers. The company will also extend smart technology to all its water treatment works and pumping stations so water will be monitored from source to tap – a first for the UK water sector.

SES said it intends to maximise the use of advanced technology to help understand the condition of its underground pipes without needing to dig them up, reducing cost, disruption and effectively targeting future investment.

The company is aiming to reduce leakage to 17.8Ml/day by 2030, a 26.6% reduction from 2019/20 levels and reduce by over 62% by 2050, exceeding (by 12.5%) the Government’s target of 50% leakage reduction by 2050.

The £413 million spend between 2025 and 2030 represents an increase of £13.3 million per year compared to the 2020 to 2025 period.

The £413 million is a combination of the £360. 2 million base spend to maintain and run the business and an additional enhancement spend of £52.8 million to achieve the ambitions set out in the company’s long-term delivery strategy. The base spend includes £30.4 million for water resources and £292.6 million for water network plus. The plan also includes a £37.1 million to run SES Water’s retail activities.

Enhancement expenditure includes:

• Drinking water quality enhancement - £9 million - Installing UV treatment at two of water treatment works to remove the risk of cryptosporidium
• Enhancing the resilience of treatment works and processes - £7 million
• Additional leakage reduction and enhanced network resilience - £10 million
• Smart water customer experience - £24.5 million - Funding the accelerated installation of 194,000 smart meters to further reduce leaks
• Environmental enhancement - £5 million

In total the company plans to spend £176.8 million in CAPEX in AMP8 (excluding Developer Services), an increase of £53.4 million from the current forecast CAPEX in AMP7 of £123.4 million.

SES Water said that additional equity will be required at the end of AMP 7 and into AMP 8 to support the significant investment and underpin the company’s financial resilience. Average water bills will need to rise by c£25 per year from c£237 in 2024/25 to c£262 in 2029/30 – a 10.5% increase – to help fund the extra investment.

SES business plan flags up strategic review which could result in sale of company

However, the water company draws attention to the fact that as noted in its Annual Performance Report 2023, shareholders are currently undertaking a strategic review of their investment, together with the other entities in the East Surrey Holdings Group, which may result in the sale of the company and a change of ownership.

SES Water is jointly owned by the major Japanese businesses, Sumitomo Corporation and Osaka Gas who each hold a 50% stake in the UK-based holding company Sumisho Osaka Gas Water UK Ltd.

The strategic review is envisaged to complete on or before 31 December 2023. In the event that the strategic review results in the sale of the company, the Board expects that as part of the process of transferring the company’s water supply licence, a new owner would be required to confirm appropriate ongoing funding arrangements, which the Board believe would include c£35 million of new equity. SES Water also cautions that a new owner “may of course wish to review and possibly amend the company’s plan.”

SES Water Chief Executive Officer, Ian Cain, commented:

“We’ve prepared an ambitious plan tailored to deliver the needs of our customers as the water industry strives to transform its services, deliver new legal and regulatory requirements and build the trust of its customers; something that will be essential if we are to successfully deliver many of our ambitious short and long-term targets.

“Our aim is to continue leading in key areas of innovation and performance, as we deliver our plans to play a meaningful role ensuring the industry is fit for the future.

“There is a great deal of work for us to do, but as a small, local company which is already performing strongly in the areas that matter most to our customers, we’re confident we can deliver our commitments, empower our customers and work with our communities to enhance nature and improve lives.”